The areas of supervisory focus for banking regulators in 2024 will look a lot like their focus since the bank failures earlier this year, with asset liability management, credit risk, cybersecurity, and operational risk top of mind, representatives from the Federal Reserve, OCC and Treasury Department said today during a panel discussion at The Clearing House annual conference in New York City.
Patricia Grady, chief deputy counsel at the OCC, pointed to the agency’s 2024 bank supervision operating plan for more insight into her agency’s areas of focus. She also noted that Acting Comptroller of the Currency Michael Hsu has outlined four key priorities that will guide OCC supervision: guarding against complacency by banks, reducing inequity in banking, adapting to digitalization and managing climate-related financial risk. For example, in terms of guarding against complacency, “we expect banks should be prepared to address a wide range of risks,” she said.
Michael Gibson, director of the Fed’s Division of Banking Supervision and Regulation, also pointed to his agency’s recently published supervision report. Among other things, the report says the Fed is seeking to improve its supervision of interest rate risks by conducting targeted reviews at banks exhibiting higher interest rate and liquidity risk profiles. Another area of focus for regulators is digital assets and tokenization, with the OCC holding a conference on the latter early next year.
At the same time, the role of cryptocurrency in allegedly financing terrorist operations is coming under increased scrutiny, with Neil McBride, general counsel at the Treasury Department, noting that the Financial Crimes Enforcement Network recently issued proposed rulemaking to identify international convertible virtual currency mixing as a “class of transactions” of primary money laundering concern.